Tag: Federal Circuit Court of Appeals

SAS v. WPL Litigation is of Great Importance to the Smallest Creators

Software companies SAS Institute of the U.S. and World Programming, Ltd. (WPL) of the UK have been litigants for more than a decade. By all accounts, WPL presents as a bad actor which lazily cloned SAS’s world-class analytics software. But before weighing the facts necessary to consider claims of IP infringement, the Federal Circuit Court of Appeals must first overturn the errors of copyright law applied by a Texas District Court, lest those holdings further weaken the already tentative position of independent rightsholders.

Presumption of Validity

I’ve spent a lot of time recently talking about formalities in U.S. copyright law (particularly with regard to the Unicolors and Valancourt cases), and it is recognized by those who care about indie creators that certain mechanisms in our copyright system already disadvantage entrepreneurial rightsholders. The individual or small-business creator can hardly be blamed for smirking at the fact that copyright attaches automatically to a work upon fixation, when that statutory provision barely vests her with any real power to enforce her rights. Enter the inducement to register.

The primary incentive to timely registration of works with the Copyright Office is that it allows the copyright owner to obtain statutory damages and legal fees upon successful litigation of an infringement claim. But another essential inducement to registration is the “presumption of validity,” meaning that a court will presume at the outset that the work at issue is properly a subject of copyright protection based solely on its having been issued a valid registration by the Copyright Office.

The reason the presumption of validity is critical, and decades-long precedent, is that it correctly places the burden on the defendant to prove a lack of copyright in the work(s) used, if non-copyrightability is to be presented as a defense. The district court in SAS reversed this principle, placing the burden on the plaintiff to prove copyrightability of register works at trial, and then aggravated this error by engaging in an extraordinary copyrightability analysis of its own design it named a “Copyrightability Hearing.”

Not only was the hearing itself an attempt to plough new ground by this court, but its analysis was improper, citing certain features of the work (e.g. open source), which do not inherently raise copyrightability questions, and then arrived at the untenable logic that the protection of a whole work may be undermined simply because it contains unprotectable elements.

Undermining Copyrightability Itself

As noted in my first post about this case, arguably all works contain unprotectable and protectable elements, and I cited the motion picture as a highly complex combination of such elements which are assembled to compose the finished movie. Among the copyright registrations made for the project will be the motion picture as a single unit, comprising its many parts—protectable original, protectable sublicensed, and unprotectable common elements—under a single title.

Imagine the cost and time if the owner of the motion picture were required to re-prove at trial the copyrightability of the entire film through analysis of the various components and then prove that the arrangement and use of those components is sufficiently original for copyright to attach in the first place. And that’s before proceeding to trial of an infringement claim.

Now, imagine that burden is borne by the independent illustrator, photographer, writer, or music composer, if this district court’s abrogation of the “presumption of validity” were allowed to stand. “The plaintiff would face the insurmountable task of proving a negative—that all of his work is not in the public domain or not an idea,” states the amicus brief filed by Copyright Alliance.

The opportunities for independent creators to enforce their copyrights are already hamstrung by the authors’ limited resources and our overly bureaucratic system. As a result, the overwhelming majority of American creators of works do not participate in the U.S. copyright system. And that is presumably what the copyright detractors want to see.

It is no surprise that those who scorn the existence of copyrights—either because weak protection is in their financial interest or because they are disciples of the Tao of Lessig—have endorsed the district court’s findings in SAS. Because if one hopes to further erode the rights of individual creators, or, perhaps, even industrial creators, enshrining this court’s rulings as precedent would be a very effective means to achieve that end.

Courts outside the Second and Ninth Circuits can be unpredictable when it comes to copyright law; but here, the Texas district court’s novel approach might fairly be described as eccentric, if not downright misguided. For the sake of creators much smaller and more vulnerable than SAS, the Federal Circuit must reverse that court’s multi-faceted errors of law before this case can proceed to the merits of the actual claim.

ITC Ruling Shows Need for Congressional Reform

In August, I wrote a post criticizing the editorial board of The New York Times for espousing Silicon Valley talking points rather than considering the broader aspects of a case concerning the International Trade Commission (ITC).  At issue was the ITC’s claim that it had the authority to enjoin the importation of digital data being used by a company called ClearCorrect to infringe the intellectual property of Align Corporation.  The ITC does have the authority to stop the importation of “articles that infringe” and it argued that “articles” may include digital files; but this week the Federal Court of Appeals rejected the ITC’s claim of authority in this case.  Citing more than ample precedent that the statute does not allow for an interpretation of “articles” to mean anything other than tangible items, part of the decision reads:

Here we conclude that the literal text by itself, when viewed in context and with an eye towards the statutory scheme, is clear and thus answers the question at hand. “Articles” is defined as “material things,” and thus does not extend to electronic transmission of digital data.

Readers should note, however, that the decision is narrowly focused on the definition of the word “articles” and the authority of the ITC based on that definition.  The court is entirely silent regarding any of the broad “free flow of information” criticisms fearful of granting ITC this authority in principle.  In fact, the court concludes thus:

Under these circumstances we think it is best to leave to Congress the task of expanding the stat-ute if we are wrong in our interpretation. Congress is in a far better position to draw the lines that must be drawn if the product of intellectual processes rather than manufacturing processes are to be included within the statute.

In short, the statute and corresponding authority granted to the ITC may be considered by Congress as antiquated in the global digital market, and Congress may consider expanding the statute to anticipate the potential harm of importing intangible “articles” by electronic means.  Indeed, as cited in my first post, the Center for the Protection of Intellectual Property pointed out that this ITC remedy was expressly recommended by the Internet industry as an “alternative” to SOPA.  If granting ITC authority would not have “stopped the free flow of information” in 2011, it is unclear why it would do so in 2015.  Congress should consider broadening the statue to grant ITC this authority for the protection of American companies practicing fair trade.